The hate campaign towards TalkTalk, rather than receding, appears to be escalating. Spreading widespread FUD - both in the mainstream media and online - and provoking a customer backlash and mass exodus from the company. All key to driving the stock price even lower; enabling greater profits for short-sellers; and inviting idle speculation on TalkTalk's future.
Today, the mass-market Daily Mail
published a template letter
for panicking customers, encouraging its half-baked readers to exit the telco en masse. The tabloid reckons there are sufficient grounds - because of the alleged data breach - to rescind consumer contracts with the company. TalkTalk states otherwise.
Yesterday saw TalkTalk shares recover slightly; as the hedge funds which had been 'shorting' the stock unwound their positions, banking their gains to date. Doubtless doubling their profits out of the 'uptick' from their 'short squeeze
Earlier in the year it was revealed that an astonishing 18 per cent
of the company's free-float stock was loaned out to short-sellers. Exploiting the fact that much of the company's equity - the long-term shareholdings of Dunstone, Ross, Harding, and TalkTalk's Employee Share Ownership Trust - is out of circulation; stock closed-off to speculators. But leaving those vulture hedge funds with just enough clout to manipulate the price of what stock remains.
Today, the press is predicting the end of TalkTalk could be nigh; and that a hostile takeover bid may soon seal its fate. Possibly a takeover dressed up as an "act of mercy". The generous suitor "salvaging" the troubled telco from potential collapse. Stifling competition fears in Britain and Europe by pitching itself as benevolent saviour rather than pouncing predator.
Mouthpiece of the City of London, the Financial Times
claims that TalkTalk's price is now low enough to attract such a predator. The paper identifies Vodafone
as one potential buyer.
Has TalkTalk's stock hit rock bottom though? TalkTalk suffered a further decline of 5 per cent today
to 252p - as the media intensified its attacks on the telco. With scaremongers at Morgan Stanley
claiming that TalkTalk was already in trouble, even before the alleged data breach; losing market share to rival Sky. Or so they reckon:
From the FT today
Morgan Stanley warned that customer growth at the broadband provider was likely to turn negative and margin guidance for the next financial year looked a stretch. Its survey suggested TalkTalk was losing market share to Sky even before the hack.
Reputational damage meant TalkTalk would struggle both to attract customers and raise prices for its existing base, after two tariff increases in 12 months, Morgan Stanley told clients in an overnight note.
In contrast to the gloom around TalkTalk, dominant force BT smooched the market with news that its merger with mobile operator EE has been nodded through by competition authorities.
From the FT
Gavin Patterson, BT’s chief executive, welcomed the decision [by the CMA] saying the merger would increase investment and innovation.
But TalkTalk said it was “concerned” by the findings, noting that the watchdog was “divided over its findings in wholesale mobile”.
Kester Mann, an analyst at CCS Insight, said the fact that BT will not be required to make any changes to its offer to soothe competition concerns was a “particular victory for the company”. But he added that the approval would add weight to calls by rivals for a structural separation of Openreach, its fixed-line broadband network which provides services to rivals as well as BT’s retail operation. The issue is being considered as part of a review of the UK’s digital economy by Ofcom, the telecoms regulator.
Through one means or another, City financiers are determined to consolidate the telecoms sector; meaning fewer and fewer choices for broadband subscribers. Loss of competition being an outcome which rarely benefits consumers. Not to mention the mass redundancies in the industry which will inevitably follow.
Food for thought for the TalkTalk naysayers among us:-- a budget and beleaguered telco it may be, but is the market better off with or without it?
Edited by edwincluck (Thu 29-Oct-15 07:03:23)